S&P Tumbles 6% as Global Sell-Off Jolts Indian Markets
The global stock market witnessed a chaotic day on Wednesday, with the S&P 500 plummeting 6% to mark its worst day since March 2020. The sudden and steep decline in US markets triggered a global sell-off, sending ripples across the financial world. Indian indices, particularly the Sensex, followed suit, shedding over 2,200 points as investors scrambled to make sense of the sudden downturn.
The US market’s sharp decline was largely attributed to growing fears of a recession. The yield on the 10-year Treasury note fell to its lowest level in over a year, indicating a decrease in investor confidence. The Nasdaq, which is heavily weighted with technology stocks, fell into bear territory, a term used to describe a decline of 20% or more from a recent peak.
The sell-off had far-reaching implications, with markets worldwide experiencing a significant correction. The Indian rupee weakened against the US dollar, while the yield on the 10-year government bond fell to 6.85%. The rupee’s depreciation was largely attributed to the sharp decline in the US dollar, which has traditionally been a safe-haven asset.
The Indian stock market, which has been riding high on the back of a strong economy, was not immune to the global sell-off. The Sensex, which has been hovering around the 50,000 mark, lost over 2,200 points to close at 48,700. The Nifty 50, which is a closely watched index of the 50 most liquid stocks on the National Stock Exchange (NSE), fell by over 600 points to close at 14,200.
The technology and pharmaceutical sectors, which have been the darlings of the Indian market, were among the worst hit. IT stocks such as Tata Consultancy Services (TCS), Infosys, and Wipro fell by up to 5% each, while pharmaceutical stocks such as Sun Pharma and Dr. Reddy’s Laboratories fell by up to 4% each.
The sharp decline in the Indian market has left investors worried about the sustainability of the market’s growth momentum. The Sensex has been on a tear this year, with the index rising by over 15% since the start of the year. However, the recent decline has raised concerns about the valuations of the market, particularly in the IT and pharmaceutical sectors.
“While the decline in the Indian market is a concern, it is essential to put things into perspective,” said Rucha Desai, a market analyst at Edelweiss Securities. “The Indian economy is still growing robustly, and the recent decline is largely a result of global market volatility. We expect the market to recover soon, driven by domestic fundamentals.”
Despite the recent decline, the Indian market is still expected to offer good growth opportunities in the long term. The country’s strong economic growth, driven by consumption and investment, is expected to continue, making it an attractive destination for investors.
The global sell-off has also raised concerns about the impact on the Indian rupee. The rupee’s depreciation has made imports more expensive, which could lead to higher inflation. However, the Reserve Bank of India (RBI) has been keeping a close eye on the situation and has taken steps to stabilize the currency.
In conclusion, the recent sell-off in global markets has sent shockwaves across the financial world, with the Indian market being no exception. While the decline has raised concerns about the sustainability of the market’s growth momentum, it is essential to put things into perspective. The Indian economy is still growing robustly, and the recent decline is largely a result of global market volatility. We expect the market to recover soon, driven by domestic fundamentals.
Source:
https://www.thecore.in/podcasts/us-stocks-whacked-for-the-third-day-833088
